The Washington state agency that manages billions of dollars for public employee pensions and retirement accounts has expanded its investment choices to include consideration of the risks of global climate change.
The two-pronged decision by the Washington State Investment Board involves a new “investment belief” and a new shareholder proxy voting guideline, both adopted Thursday. The belief calls for “full disclosure” of the climate change risks faced by the companies in which the board invests and how the companies are managing those risks.
Obtaining such information “is necessary for us to invest responsibly,” James McIntire, state treasurer and the board’s outgoing chairman, said in a news release. “As a long-term investor, we simply cannot afford to have our investment partners ignore the increasingly obvious financial risks of climate change.”
Under the new proxy voting guideline, the investment board says it “supports shareholder proposals seeking greater disclosure of a company’s practices that address environmental issues and risks,” according to the news release. “This includes disclosure of actual and potential liabilities and contingency plans that respond to potential risk posed by climate change.”
The changes aren’t surprising. Some of the investment board’s beneficiaries had previously raised concerns about fossil-fuel investments and climate change. “We obviously have been extremely aware of and participating in discussions” about climate change risks, Theresa Whitmarsh, the board’s executive director, told The Columbian on Wednesday.
That same day, Sightline Institute, a Seattle-based environmental think tank, issued an analysis criticizing both the Washington State Investment Board and the Oregon Investment Council for investing in fossil-fuel infrastructure projects. “At a time when the Northwest is choosing whether to become a carbon export hub of global consequence or a thin green line of climate protection,” the analysis says, “the way we spend our money says a great deal about our priorities. At the moment, it looks like we’re betting the farm on coal and oil.”
The new guidelines adopted by the Washington State Investment Board also come amid a nationwide campaign by climate change activists to prod governments and universities to unload stock in coal and oil companies from their investment portfolios. In its news release, the investment board said it and other major public pension funds have been urged to divest their holdings in fossil-fuel companies.
But the board, which had $104.1 billion in total assets under management as of June 30, rejects such a move.
“Because most of the (board’s) investments are externally and passively managed, it would be a difficult and costly exercise to divest,” McIntire said in the news release.
“But more importantly, once you sell your stock, you’ve lost your voice and any influence you had in the way the company is being managed. You’ve sold your seat at the table to someone else.”
